The Middle East’s technology market is on track for significant transformation by 2026, driven by the convergence of artificial intelligence (AI), cyber security, and large-scale infrastructure investments, according to a report from Omdia. While global technology spending is projected to expand by 10.2% year-on-year, surpassing the US$6 trillion threshold, the Middle East is expected to grow at a slightly slower rate of 7.94%, reaching a total market value of US$174.9 billion. This growth underscores the region’s strategic importance in the global technology landscape.
“The twin forces of AI and cyber security will continue to play a big role across the Middle East in the next year,” said Trevor Clarke, chief analyst at Omdia. He noted that these elements are not only individual trends but deeply integrated into various technological applications. This integration marks a shift from exploratory projects to scalable deployments across diverse sectors such as government, finance, and energy.
As AI evolves into a foundational enterprise layer, organizations in the region are moving past pilot programs to adopt AI as a core component of their operations. Clarke emphasized this transition, stating, “We expect continued efforts to be ‘AI fit,’ but also a much stronger embrace of AI platforms and tools as core business platforms.” Much of this evolution will occur behind the scenes, focusing on specialized AI embedded into critical business processes.
Another significant trend is the convergence of AI with the physical environment, propelled by advancements in the internet of things (IoT), robotics, and edge computing. Clarke explained, “Artificial intelligence offers powerful reasoning and prediction capabilities but is limited without a connection to the physical world.” IoT acts as that crucial link, enabling AI to interact with its surroundings in real time. Current research indicates that 34% of organizations are already employing AI and machine learning in their IoT deployments, with 44% identifying this integration as a future priority.
This uptick in AI adoption is driving substantial investment in AI-ready infrastructure, particularly data centers, which are becoming essential for the development and execution of AI workloads. “Datacentres built for the AI era are becoming critical infrastructure,” Clarke noted, highlighting the increasing competition among hyperscalers, telecom operators, and emerging “neocloud” providers to capture market share. However, this rapid growth raises concerns about power consumption and sustainability, issues that will increasingly shape technology strategy.
As AI adoption accelerates, the landscape of cyber security is evolving as well. Cyber criminals are leveraging AI to enhance their attacks, particularly in the realms of ransomware and phishing, raising the stakes for organizations managing critical infrastructure. Clarke warned, “As AI is harnessed by attackers for more adaptive ransomware and phishing campaigns, the stakes have never been higher for security teams.”
Organizations are shifting from static security measures to adaptive, AI-enabled frameworks, increasingly relying on a mix of machine learning and generative AI as foundational capabilities rather than ancillary ones. The convergence of IT and operational technology, alongside the rise of physical AI, is broadening the potential attack surface, further complicating the security landscape. Clarke noted a growing concern over burnout among cyber security teams, attributing this to an intensified threat environment.
Sovereign AI is emerging as a strategic focus, especially for governments and industries deemed critical. However, the definitions surrounding sovereign AI are still fluid. “We don’t yet have an industry standard for what ‘sovereign AI’ really represents,” Clarke stated, pointing to the ongoing development of strategies influenced by national sovereignty concerns regarding AI.
The pace of investment and development will be crucial, as Clarke remarked, “One of the challenges to watch is whether investments across the region can keep up with what is effectively a global innovation speedrun.” He believes cloud expansion will continue across the Middle East in 2026, but success will hinge less on scale and more on ecosystem strength. The role of regional channel partners will be a key indicator of which cloud platforms will dominate.
Clarke also identified agentic AI and edge computing as emerging technologies likely to provide immediate commercial benefits, particularly when combined with robotics and physical AI. However, he cautioned that the advantages may not be uniformly distributed across the sector. “There will be winners and losers,” he said, predicting that significant benefits will be concentrated among a limited number of players.
As the job market enters a phase of uncertainty, the demand for AI, data engineering, and cyber security skills remains robust. Yet the rise of AI agents may lead organizations to reconsider traditional hiring practices, potentially complicating entry for new graduates. “One of the big elephants in the room is whether employers will continue the same level of recruitment or explore AI agents more aggressively,” Clarke pointed out.
Overall, as 2026 approaches, the Middle East’s technology agenda will not only center on the rapid adoption of AI but also on how securely, sustainably, and strategically the region builds the foundational elements to support it.
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